02-031 C.M.R. ch. 931, § 5 - Standards for Evaluation of Reasonable Payments

A. For viatical settlements, in which the insured is chronically or terminally ill, the compensation for viaticating a life insurance policy or certificate on which no future premium is due, whether because it is a paid-up policy, because of a disability waiver, or for any other reason, shall not be less than the following amounts:

Insured's Life Expectancy	Minimum Percentage of Net Face Amount Received by Viator
Less than 6 months	(81%)
At least 6 but less than 12 months	(77%)
At least 12 but less than 18 months	(74%)
At least 18 but less than 24 months	(70%)
24 months or more	(55%)

B. A settlement producer or provider may not seek or obtain any compensation from the viator.

C. Except as provided in subsection E, the viator will not be responsible for any future premiums after the date of the settlement contract, and the amount of compensation received by the viator may not be reduced by the amount of premium required to keep the policy in force, except as provided in subsection D.

D. If the life expectancy is less than 30 months and future premium is due on the policy, the minimum amounts in Subsection A may be reduced by the amount of premium due during the insured's life expectancy.

E. If a settlement provider enters into a settlement contract that allows the viator to retain an interest in the policy, the settlement contract shall contain the following provisions:

(1) A provision that the settlement provider will effect the transfer of the amount of the death benefit only to the extent or portion of the amount viaticated. Benefits in excess of the amount viaticated shall be paid directly to the viator's beneficiary by the insurance company;

(2) A provision that the settlement provider will, upon acknowledgment of the perfection of the transfer, either;

(a) Advise the insured, in writing, that the insurance company has confirmed the viator's interest in the policy; or

(b) Send a copy of the instrument sent from the insurance company to the settlement provider that acknowledges the viator's interest in the policy; and

(3) A provision that apportions the premiums to be paid by the settlement provider and the viator. It is permissible for the viatical settlement contract to specify that all premiums shall be paid by the viatical settlement company. The contract may also require that the viator reimburse the viatical settlement provider for the premiums attributable to the retained interest.

Notes

02-031 C.M.R. ch. 931, § 5